How Stampli Supports US Companies with International Locations
Doing business overseas presents a number of challenges for management. According to the Harvard Business School, language barriers, cultural differences, managing global teams, and currency differences make it difficult to grow an international business.
Successful companies leverage technology to overcome challenges and to manage foreign operations efficiently. Stampli’s end-to-end accounts payable (AP) automation gives you full control and visibility over all your corporate spending, and allows users to process invoices in multiple international locations. Here are the important challenges for international business, and how Stampli can help.
Understanding the Biggest Challenges
Doing business overseas is more complex, and you need better tools to operate more efficiently and to analyze financial results. In this podcast episode, Rachita Sundar, SVP of Finance at Hubspot, explains why planning is the key to achieving better outcomes. Here are some critical factors businesses must consider.
Consolidating financial data
Accounting principles require US-based companies to generate financial statements in US dollars. If a firm conducts overseas business in euros or other currencies, all transactions must be converted into US dollars for financial reporting purposes. If an Irish division does business in euros, accountants convert the financial statements from euros into US dollars.
Management needs to review the financial results of each foreign subsidiary, and analyze the consolidated financial statements for the entire business.
Managing AP teams in multiple countries
Companies with international locations may process accounts payable in multiple locations, and each location will likely use a slightly different process for invoice processing. The processes used to receive invoices, code data, approve invoices, and to make payments are often determined at the division level.
Complying with international tax laws
Most countries have a unique set of tax laws, including taxes on business transactions. Automation can help businesses collect and submit the correct tax amounts to the right taxing authority. Stampli allows companies to automate their existing processes, without the need to change a process to fit the software’s requirements.
Reviewing an Example
As an example for this discussion, assume that US Sporting Goods operates in the US, and through two foreign subsidiaries. Champion Soccer, a manufacturer of soccer equipment, is based in England, and Alpine Equipment is a Irish-based hiking equipment manufacturer. Champion does business using the British pound, and Alpine operates using the euro. Each subsidiary manages a separate AP team.
Combining the general ledger
The US Sporting Goods controller receives financial statements from both subsidiaries each month. Each subsidiary uses the same set of general ledger accounts, with additional coding to identify a particular entity:
US Operations – 10
Champion Soccer – 20
Alpine Equipment – 30
For example, the insurance expenses are posted to account 7100-20 for Champion, and 7100-30 for Alpine. The balances are converted into US dollars, so that the financial statements can be consolidated each month.
Businesses use Stampli to easily code invoices by selecting the correct currency from a drop down menu. If the vendor’s default currency is assigned in the financial system, Stampli will use the same data, so that invoices will be automatically coded using the correct currency. Users can keep the default currency, or use the drop down menu to change it.
Processing tax payments
Businesses in England and Ireland are both subject to a Value-Added Tax (VAT), which is defined as: “… a consumption tax assessed on the value added in each production stage of a good or service. Every business along the value chain receives a tax credit for the VAT already paid.” Let’s assume that England’s VAT tax rate is 15%, and that the rate is 20% in Ireland.
Companies that are charged VAT taxes must track the amounts paid to file for tax credits, and Stampli gives users the ability to automatically calculate and track international taxes. The software pulls in international tax codes from your financial system, which can easily be applied when coding invoices.
Tax codes can easily be selected in a drop-down and applied to a specific PO or general ledger account. This feature eliminates the need to find the right tax code and manually calculate the taxes due for each invoice. The software can also calculate taxes for individual line items in a invoice
How Stampli Adapts to Your AP Process
The two subsidiaries have different approval policies. Champion requires two approvers for all invoices greater than 10,000 pounds, and Alpine’s requirement for two approvers is an invoice greater than 8,000 euros.
Stampli’s AP assignments technology allows users to capture and route each invoice to the right people, depending on the subsidiary’s internal policies. Users don’t have to change their invoice processing flow, because Stampli can be adapted to the user’s needs.
Both subsidiaries code invoices with a vendor number. Champion uses eight vendors, while Alpine purchases goods from 10 vendors. Both entities need to track the monthly amounts spent with each vendor, in order to take advantage of quantity discounts offered by sellers.
Stampli Insights gives users access to a number of reports, and the ability to create customized reports. Businesses can use the advanced search function to search for invoices by vendor, so you can monitor total purchases for potential quantity discounts. Stampli Dashboards provide a holistic view of your AP data with three pre-built Dashboards and interactive widgets.
Each subsidiary has recurring invoices with at least one vendor, including utility and rent payments, along with insurance premium payments. Stampli allows AP teams to create and assign predefined invoice fields, including GL, vendor, amount, and other data for each recurring invoice. As a result, the coder doesn’t have to fill in the same information each time a new version of the recurring invoice is processed.
Take control over invoice and bill processing with smart, intuitive, and actionable AP Automation using Stampli.
Simplify Operations Using Stampli
Stampli is a complete AP Automation software that brings together accounts payable communications, documentation, corporate credit cards, and payments all in one place, allowing AP to have full control and visibility over corporate spending.
Use technology to streamline your international operations, and position your business for growth with Stampli.
